Agricultural Cooperatives I: History, Theory and Problems

Abstract

This paper presents the principles of cooperation and briefly describes the history and development of agricultural cooperatives in developed and less-developed countries, with particular emphasis on South Africa. A new Cooperatives Act, based on international principles of cooperation, was promulgated in South Africa in August 2005. The theory of cooperatives, and new institutional economics theory (NIE) (including transaction cost economics, agency theory and property rights theory) and its applicability to the cooperative organizational form, are also presented, as are the inherent problems of conventional cooperatives, namely free-rider, horizon, portfolio, control and influence cost problems caused by vaguely defined property rights. An analysis of the future of cooperatives in general, based on a NIE approach, suggests a life cycle for cooperatives (formation, growth, reorganization or exit) as they adapt to a changing economic environment characterized by technological change, industrialization of agriculture and growing individualism.

Agricultural cooperatives for social capital development in Latvia

“…Moreover, cooperatives are recognized as an important instrument for socio-economic improvement of the community (Emana, 2009). The United States (US) National Cooperative Business Association (Ortmann, King, 2007) also emphasizes the unique characteristics of cooperatives relative to other (investororiented) businesses:…”

The Impact of Political Culture on the Human Rights-based Approach to Development in the Central Highlands of Vietnam

“…More importantly, this model potentially fits with the key HRBA principles of participation, empowerment and accountability that the AAV project seeks to implement in the community. Ortmann & King (2007) argue that cooperatives can provide a means for the community to challenge their current social and economic marginalization, especially in a political culture that is not adequately participatory. By definition, an agricultural cooperative is an autonomous association of members voluntarily coming together and working together to satisfy their social, cultural and economic needs through a collectively-owned and democratically-managed enterprise (Ortmann & King 2007).…”

Organizational challenges and the institutional environment: a comparative analysis of dairy cooperatives in Kenya and Morocco

“…A promising development is the recent establishment of the interprofessional platform, FIMALAIT, to design appropriate dairy policies, and act as a mobiliser of investment support to address the milk quality challenges. In the end, good collaboration among the state, farmer organizations, private companies and NGOs, could lead to a more "pro-active role in overcoming market constraints to achieve pro-poor agricultural growth" (Ortmann and King, 2007).…”